An Argument to Support the Requirement That All Companies Over

question 1

Multiple Choice

An argument to support the requirement that all companies over a certain size should adhere to accounting standards is:

• A) Larger companies have greater political and economic importance and this increases the demand for financial information about the entity by external users.
• B) Larger companies can afford to pay for complex accounting systems and the experts necessary to design and maintain them.
• C) The Conceptual Framework and accounting standards are designed for larger enterprises.
• D) The Australian Securities and Investment Commission should only be responsible for large enterprises.

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Definitions:

Tension

a force that stretches something, making it longer or tighter.

Shear

A strain in materials characterized by slippage along a plane or planes parallel to the imposed stress.

Confining Pressure

The pressure applied equally in all directions on a rock or sediment body usually due to the weight of overlying materials.

Fluid Pressure

The pressure exerted by a fluid at rest in a given point within the fluid, which can significantly affect geological features and human-engineered structures.